The banking industry’s top government watchdog has ended intense scrutiny of U.S. Bancorp’s anti-money laundering practices after three years, a period in which the company spent heavily to improve safeguards against criminal activity.

The Office of the Comptroller of the Currency (OCC) in late November terminated a 2015 consent order that found that U.S. Bank, the nation’s fifth largest, lacked an adequate “system of internal controls” and “inadequate training” regarding money laundering.

Minneapolis-based U.S. Bank announced the termination of the order late last week.

The end of the consent order signaled acceptance by regulators of the company’s new measures to comply with anti-money laundering laws and the Bank Secrecy Act, the 1970 law that requires banks to work with the government to combat money laundering.

“The OCC believes that the safety and soundness of the bank and its compliance with laws and regulations does not require the continued existence of the order,” the federal agency said in the document that terminated the 2015 consent order.

The order was an early sign of larger trouble for U.S. Bank as the agency and federal prosecutors examined suspicious transactions at the bank from 2009 to 2014. In February this year, the company agreed to pay $613 million to the federal government to settle charges that it did not guard against money laundering.

When the settlement was announced, U.S. Bancorp Chief Executive Andy Cecere said the company “accepted responsibility for the past deficiencies.” He added: “Our culture of ethics and integrity demands that we do better.”

Regulators and prosecutors found problems in the overall program and processes to combat money laundering at U.S. Bank. Among them: U.S. Bank restricted resources used to check on money laundering, limited the number of transactions it reviewed and didn’t tell regulators about those limits.

In response, the government forced U.S. Bank to examine each line of business for its ability to spot customers trying to engage in such criminal behavior and develop new training procedures for employees.

At the heart of the government investigations was a case involving a payday lending company based in Kansas run by a former race car driver named Scott Tucker. He was sentenced earlier this year to 16 years in prison for illegally charging customers extremely high interest rates — as much as 1,000 percent — and trying to conceal his operations from regulators by basing them on American Indian reservations.

From 2008 to 2012, Tucker’s companies generated more than $2 billion in revenue and hundreds of millions in profit, with most of the money moving through U.S. Bank accounts. The government alleged U.S. Bank employees ignored signs that Tucker was using American Indian tribes to conceal his ownership of the payday lending company and related accounts.

Tucker’s story gained attention on the Netflix “Dirty Money” series this year. In September, the government announced that about $505 million would be returned to scores of people who were swindled by Tucker’s firms.

A former facilities director at the University of Texas School of Law was indicted this week by a Travis County grand jury on charges of theft, money laundering and abuse of official capacity.

Jason Shoumaker who worked for the university for 10 years, was fired last year after a co-worker made a complaint about his spending, which prompted an internal investigation that was later referred to the Travis County district attorney’s office.

Shoumaker was arrested in May on six counts of tampering with government records after authorities said he had been reporting for work and collecting pay while he was in Las Vegas, the U.S. Virgin Islands, Cozumel and other places, according to arrest affidavits filed against him. He also was accused of using fraudulent time sheets to try to get a larger employment separation payout after he was fired, the documents say. Shoumaker has not been indicted on those charges.

The indictments handed down Wednesday say he unlawfully took money from UT without its consent through criminal activity. Court documents do not specify how much he is accused of taking, but say the amount was $300,000 or more, the minimum required to be charged with a first-degree felony.

The documents say the theft began about Jan. 10, 2013, and continued until Aug. 23, 2017. They allege that Shoumaker had used procurement cards, contracts, invoices and money that he got through his employment at UT to make fraudulent payments to himself and several companies, including Northpoint Commercial, TC Consulting, A&G Electric, Peal & Associates, Assertive Business Solutions, Tommy’s Garage and Central Transportation Services.

Shoumaker was arrested Wednesday and released shortly after posting bond, jail records show. If convicted, he faces between 5 to 99 years in prison and a fine of $10,000 for each charge.

“There is not a whole lot to say at this juncture,” his attorney, Perry Minton, said Thursday. “The stuff he was charged with a number of months ago and what he was indicted on yesterday are all matters we have not seen a single thing on. It is a very technical forensic accounting deal that has taken them months to put together. It’s going to take that long for us to do the same. If he has done something that has cost the university money, he is going to be responsible for it and pay it back, but we are going to have our own forensic investigators before we talk about anything.”

According to the arrest affidavits filed against Shoumaker in May, several co-workers told authorities they started noticing in 2016 that he wasn’t showing up to work and “didn’t seem to be doing his job anymore.”

One colleague said she often covered for him and would send him text messages from time to time to see where he was, the court documents say. She said one week he had texted that he was on his way to work, but investigators found that he was in Las Vegas at the time and that his personal credit card had been used for taxi rides, professional massages and lunch at Hooters, according to the affidavits.

He also had charged meals, alcohol and rental cars in Florida, California and in Port Aransas during times he said he was working, the affidavits say. He had no state business in those locations at the time, the court documents say.

Shoumaker had not been submitting electronic time sheets to the university and had been told to report all vacation time directly to human resources because of poor work performance, the affidavits say. After he was fired, the human resources director asked him to submit electronic time sheets, which were found to be fraudulent, the documents say.

UT spokesman Gary Susswein said the university has already taken steps to improve its spending control and procedures, including tightening signature requirements by project managers and allocating more resources to monitor its procurement card program, which allows faculty and staff members to charge expenditures related to their jobs.

The university also hired legal counsel after learning of the allegations against Shoumaker to conduct an internal review of his entire work history at UT and all other issues related to the case. That review is still ongoing, the university said.

“The University of Texas takes its responsibility as a steward of public dollars extremely seriously and will continue to work closely with the district attorney as the investigation and prosecution of Mr. Shoumaker moves forward,” Susswein said.

Federal prosecutors in Manhattan filed the first criminal charge against a U.S. broker-dealer under a decades-old anti-money-laundering law, accusing a small Kansas firm of ignoring “red flags” about a shady payday lender.

Central States Capital Markets failed to file a suspicious-activity report related to former customer Scott Tucker, who’s serving a 16-year sentence for using Native American tribal entities to hide a massive payday-lending scheme, prosecutors in New York said Wednesday. The 1970 Bank Secrecy Act requires financial institutions to assist in detecting and preventing money laundering, such as reporting cash transactions above $10,000. A 1992 amendment required the suspicious-activity reports.

Central States, based in Prairie Village, Kansas, agreed to forfeit $400,000 and enhance its bank-secrecy and anti-money-laundering compliance program, prosecutors said. The suit stems from the company’s “willful failure” to alert authorities to Tucker’s behavior, even after the firm’s chief executive officer was tipped off to major elements of the scheme by Tucker himself.

Under the agreement, overseen by U.S. District Judge J. Paul Oetken, the case against Central States will be deferred for two years and then dismissed.

The 25-person firm failed to follow its own procedures for dealing with suspicious activities when it opened investment accounts for Native American tribal entities that Tucker was using to mask his illegal operation, the government said.

“CSCM’s anti-money-laundering program was operated with serious gaps in oversight, responsiveness and diligence,” U.S. Attorney Geoffrey Berman said in a statement. “As a result, CSCM failed to investigate and report suspicious transactions relating to a historically significant pay-day lending fraud.”

The company, in an emailed statement, said it was pleased to have resolved the case and that it “accepts full responsibility for the past deficiencies” in its anti-money-laundering program. The firm said it will hire a full-time chief compliance officer, step up training and hire a consultant to conduct annual reviews.

In October 2017, Tucker and his lawyer, Timothy Muir, were convicted after a trial in federal court in Manhattan for their roles in a “massive payday lending scheme” that targeted people across the U.S. with short-term, unsecured loans with interest rates as high as 700 percent, the U.S. said.

According to prosecutors, Tucker attempted to get around the numerous state usury laws he violated by entering into sham relationships with tribal entities to mask his control of the company and gain the protection of their tribal sovereign immunity. In 2012, he even alerted the chief executive officer of Central States of his plan for the tribal entities, but the company ignored the red flag, the U.S. said.

“Numerous suspicious transactions went undetected and unreported by CSCM,” the government said

https://theamla.com/wp-content/uploads/2018/12/red-flag.jpg800800Jon McGauleyhttps://theamla.com/wp-content/uploads/2017/02/amla-logo-web2017.jpgJon McGauley2018-12-20 10:33:332018-12-20 10:33:33Broker Is the First Charged Under Money-Laundering ‘Red Flag’ Law

According to prosecutors, the scheme would start with a person using a bad credit card to transfer funds into an inmate’s account.

Then the inmate would ask someone at the justice center to send the money in his account to a friend or family member, officials said.

Finally, investigators said an employee at the jail would write a check to someone on the outside.

The banks connected to the credit cards lost about $4,000 were lost throughout this process, officials said.

Hamilton County Sheriff’s Office spokesman Lt. David Daugherty said this case is the first of its kind for the county.

The case has been under investigation for about two years, he said, and it has resulted in changes to how money is processed from inside to outside the jail.

Before inmates could transfer up to $500 out of the jail at once, Daugherty said. Now, the amount is up to $250.

He said now there is more internal and external vetting and credit cards are checked for clearance before transactions are made. Inmates are also restricted to one transaction per month, Daugherty said.

One of the nine defendants is already being held at the Hamilton County Justice Center. Trials in the case have not yet been scheduled.

The UBS broker-dealer unit provided clients with what U.S. regulators called “banking-like services,” such as wire transfers, check writing and ATM withdrawals, but it didn’t structure its anti-money-laundering compliance program to address the potential use of its offerings for illicit-finance purposes, regulators said.

UBS is to pay $5 million to the Treasury Department, $5 million to the Securities and Exchange Commission and another $5 million to the Financial Industry Regulatory Authority, the industry-funded brokerage regulator.

The bank “is pleased to have resolved this matter, which addressed certain legacy anti-money-laundering program deficiencies,” a spokesman for UBS said.

The Office of the Comptroller of the Currency this year censured UBSover “systemic deficiencies” in anti-money-laundering systems at its branches in New York, Connecticut and Florida. The order didn’t carry monetary penalties.

FinCEN said Monday that UBS Financial Services had failed to provide sufficient resources to ensure day-to-day anti-money-laundering compliance. Inadequate staffing led to a backlog of alerts and decreased the broker-dealer’s ability to file timely suspicious-activity reports, FinCEN said.

UBS Financial Services, over a period of several years, processed through certain brokerage accounts hundreds of transactions that showed red flags associated with shell-company activity and failed to adequately monitor foreign-currency-denominated wire transfers worth tens of billions of dollars that were conducted through its commodities accounts and retail brokerage accounts, FinCEN said.

Shell companies are legally formed corporations, but they can also be used to mask the beneficial ownership of account assets and can make tracking funds more difficult for law enforcement and tax officials. FinCEN issued guidance in 2006 on the money-laundering risks of shell companies.

The broker-dealer’s monitoring system failed to capture critical information about the foreign-currency-denominated wire transfers, including sender and recipient information and the country of origin and destination, FinCEN said.

“Financial institutions must fully evaluate and identify the specific [anti-money-laundering] risks of the business and services they offer to their customers so they can proactively develop and implement an appropriate [anti-money-laundering] program to mitigate those risks,” FinCEN said.

The Finra fine includes $4.5 million against UBS Financial Services for failing to properly oversee billions of dollars in foreign-currency wire transfers and $500,000 against UBS Securities LLC for failing to reasonably monitor “penny stocks” transactions from January 2013 to June 2017.

The bank’s failure to monitor the transactions was discovered in 2012 and UBS failed to put in place a reasonable system until April 2017, Finra said.

A Russian couple, whose north Raleigh mansion was raided by the FBI, and three others have been indicted on a slew of charges, including money laundering, immigration fraud and a murder-for-hire plot.

The charges from the U.S. Attorney’s Office in Raleigh allege that Leonid Teyf, 57, orchestrated a kickback scheme in which he funneled money from Russia Military Defense contracts, skimming more than $150 million.

The alleged kickbacks took place over a two-year period and were orchestrated through a company called Voentorg, where Teyf served as deputy director. Some of the money was paid off to others, while the rest was placed in bank accounts in the U.S. and abroad, investigators claim.

Along with his wife Tatyana Teyf, 41, and Alexsy Timofeev, 37, Teyf is alleged to have created businesses and opened a series of financial accounts to launder the money, including a company called CTK Transportation in Illinois.

At one unnamed American bank, Teyf and his co-conspirators received at least 294 wire transfers totaling $39.5 million, according to the U.S. Attorney’s Office. Foreign corporations and banks in countries known for money laundering were cited as the source of 293 of the wires.

Additional charges include conspiring to bring a foreign national in the U.S. illegally, an allegation that also includes 41-year-old Olesya Yuryevna Timofeeva, wife of Timofeev.

Teyf, along with associate Alexei Polyakov, is also accused of making false claims to obtain a U.S. visa.

In a separate scheme that was discovered during the investigation into the money laundering operation, Leonid Teyf is accused of paying $25,000 to have someone murder a man he believed was having an affair with his wife. Teyf also sought to have the man deported, allegedly paying $10,000 to a U.S. Department Homeland Security official to make that happen.

The charges come more than a week after multiple media outlets reported that the FBI was raiding the Teyfs’ north Raleigh mansion in North Ridge Country Club on Dec. 5. The couple bought the 16,856-square-foot estate in 2012 for $4.2 million, at the same time that the alleged money laundering scheme was taking place.

Since then, the Teyf’s have expanded their reach into Raleigh real estate, buying a 2-story historic building on East Hargett Street for nearly $1 million in May, with plans to potentially convert the space into a restaurant. The Teyfs also are partners with Blue Sky Services in the Wyndcrest Subdivision in north Raleigh.

The Illicit Art and Antiquities Trafficking Prevention Act (HR 5886), proposed in the US Congress in May, is now in limbo after the November mid-term elections. However, it could be reintroduced to the new Congress in January 2019, amid a recent rise in anti-money-laundering initiatives worldwide.

In the last month alone, German police raided Deutsche Bank’s headquarters in Frankfurt as part of an investigation into the lender’s association with criminals laundering money through offshore tax havens, stemming from information in the Panama Papers and Offshore Leaks documents. Last week, the UK parliament suddenly suspended the tier 1 (investor) visa category for new applications due to corruption fears, effective immediately. Known as the “golden visa”, the scheme provided fast-tracked settlement for people willing to invest millions in the UK but was criticised for providing the super-rich with an easy way to launder stolen wealth. New rules to be announced in 2019 will require applicants to provide comprehensive audits of their financial interests.

The initial introduction of HR 5886 in the US came on the heels of the European Parliament’s fifth Anti-Money-Laundering directive, adopted earlier this year, which applies to all businesses selling works of art with transactions of €10,000 or more, irrespective of the payment method. Similarly, HR 5886 would apply the Bank Secrecy Act (BSA) to the art and antiquities market in order to quash money laundering. Dealers would be required to report transactions exceeding $10,000.

The bill would also force those who sell at least $50,000 worth of goods in a year to submit their financial records to the US government. But whether money laundering is prevalent enough within the industry to justify the regulatory burden it could place on dealers has become a point of contention, with some in the trade questioning who the legislation ultimately benefits.

The challenge with regulating the art business, says Andrew Schoelkopf, the president of the Art Dealers Association of America (ADAA), is that “those who seek to regulate it have a poor understanding of how the business actually functions”. He argues that money laundering is “simply not something that’s pervasive” in the art market.

The United Nations Office on Drugs and Crime (UNODC) estimates laundered funds to account for 2%-5% of the global GDP ($800bn-$2tr) annually, but there is no clear data illustrating the scope of money laundering within the art market. Like many high-value assets, art can ostensibly be used to “wash” dirty money—that is, profits gained illegally, often via the sale of drugs or weapons but also through such activities as embezzlement, insider trading and illegal gambling. These assets can then be traded or used as collateral, effectively scrubbing the criminal stain from the ill-gotten cash.

The art industry is an attractive marketplace for such activity for two main reasons. First, it is growing at a rapid rate; the US is the world’s largest art market, valued at $26.6bn and accounting for 42% of the global total of $63.7bn in 2017. A study recently conducted by Deloitte predicts that art and collectible wealth held by ultra-high-net-worth individuals will grow from an estimated $1.62tr in 2016 to $2.7tr in 2026.

Second, the art market is notoriously inscrutable—the price of a work of art is more subjective, and therefore volatile, than that of many other commodities. James McAndrew, a former specialist at US Customs and the Department of Homeland Security (DHS) and a forensic specialist in international art trade at the New York-based law firm GDLSK, says it is for that same reason that money laundering is less of an issue in reality than it is in theory—art is highly illiquid and difficult to sell. When it comes to high-priced works of art, especially those sold through legitimate dealers and auction houses, it is even harder to fudge the funds. “It’s like buying a house. You want a clear title,” McAndrew says.

Within the last decade or more, there have only been a few instances in which works of art were used as an accessory to money laundering, including the high-profile case of Brazilian banker Edemar Cid Ferreira in 2005, who smuggled works of art out of the country to hide illegal profits. In March, as part of an FBI sting operation to bust a $50m international securities fraud and money laundering scheme, the London-based dealer Matthew Green was charged with being part of a plot to “clean-up” £6.7mthrough the sale of a Picasso. He is yet to plead.

The common trait of both cases is that money laundering through art was just a small part of a bigger criminal operation—there have been no convictions to date for pure money laundering in the art trade. “Increased AML [anti-money laundering] legislation for the art world just seems like an opportunistic measure for prosecutors in order to force guilty pleas for unrelated corruption-and-fraud type crimes,” says Peter Tompa, the director of the Global Heritage Alliance and of counsel at the Washington, DC-based law firm Bailey and Ehrenberg.

Yet when Congressman Luke Messer, a Republican from Indiana, introduced HR 5886 in the US House of Representatives in May, his chief stated aim was to counteract terrorist financing “and crack down on terrorist organisations like ISIS”. It represented the evolution of a bill that had died on the Senate floor in 2016—the Terrorism Art and Antiquity Revenue Prevention Act, which was specific to the sale of looted antiquities from countries such as Iraq and Syria.

“Money laundering is a very different issue for antiquities than it is for art at large,” Tompa says, adding that he agrees such legislation could help promote the repatriation of looted antiquities, though a recent US State Department-funded study found that the Islamic State (IS) probably made little more than $1m from the sale of such objects—a far cry from the previously stated estimate of anywhere from $4m to $7bn. There is little to no numeric evidence connecting US art sales with IS or other terrorist activities.

That has not dissuaded proponents of the bill. “It’s challenging to put a number to a trade that by its very nature is secretive,” says Deborah Lehr, the chairman and co-founder of the Antiquities Coalition, a private archaeological advocacy group with ties to Unesco, based in Washington, DC. For that reason alone, “this area clearly merits a closer evaluation by authorities”, she says. But opponents say it could put the art trade in a regulatory straitjacket; the ADAA’s Schoelkopf says: “Art dealers are unduly being swept up into the same ball of wax with a handful of sophisticated financial industry fraudsters who don’t abide by regulations like these anyway.”

Furthermore, the majority of US art purchases are by cheque, credit card or wire transfer, all of which pass through financial institutions already subject to the US Treasury’s Financial Crimes Enforcement Network’s (FinCEN) tracking and reporting requirements. “If you make the dealers take this kind of reporting on individually, they’re all going to make their own version of it. It’s not going to be consistent and that will cause more problems,” McAndrew says.

But John Byrne, the vice chairman of AML Rightsource, a professional services firm specialising in AML and BSA compliance, says the art world’s arguments against regulation “are neither compelling nor new”. He adds that, if the bill were enacted, dealers would have “ample opportunity to comment on any regulation so they could make the case on how different they are from traditional banks, so requirements could be tailored”.

Messer lost his bid for a Senate seat this year, so HR 5886 requires a new sponsor and, as such, will lapse at the end of December. But Tompa says the bill is likely to be re-introduced to the new Congress when it is back in session since it appears to still have some support from “certain AML contractors who presumably want to expand their compliance business”.

https://theamla.com/wp-content/uploads/2018/12/307_am_mc_moneylaundering12_ferreira_painting_purchased_hi.jpg650960Jon McGauleyhttps://theamla.com/wp-content/uploads/2017/02/amla-logo-web2017.jpgJon McGauley2018-12-12 09:31:322018-12-12 09:31:32US anti-money-laundering bill could reappear early next year

A Tampa woman is facing 20 years in federal prison after she pleaded guilty Monday to conspiracy to commit money laundering.

As part of a plea agreement with federal prosecutors, Brenda Dozier, 54, agreed to pay approximately $225,000 in restitution to the victims of the money laundering conspiracy and to a forfeiture money judgment in the same amount.

A sentencing date has not been set.

Dozier laundered money from July 2015 through at least November 2015 that had been extorted from residents by conspirators residing in the states and overseas, according to U.S. Attorney Maria Chapa Lopez.

Her India-based conspirators extorted money by impersonating IRS officers and misleading victims to believe that they owed money and would be arrested and fined if they didn’t immediately pay their alleged back taxes. As part of the conspiracy, Dozier opened bank accounts, which she used to receive the fraud proceeds, typically via interstate wire transfers, according to U.S. Middle District of Florida court records. Once Dozier had retrieved the funds, she provided the money to her co-conspirators. Dozier was paid for opening the accounts and conducting the transactions.

Three of her co-conspirators, Nishitkumar Patel, Hemalkumar Shah and Sharvil Patel, were charged on Oct. 11 in a related case with conspiracy to commit wire fraud and extortion, and with individual counts alleging wire fraud, extortion, money laundering and aggravated identity theft for their roles in the scheme.

Their trials are scheduled to begin in April 2019 in U.S. Middle District Court in Tampa.

The case was investigated by the Treasury Inspector General for Tax Administration, the IRS–Criminal Investigation, the Florida Department of Law Enforcement and the Tampa Police Department. It is being prosecuted by Assistant U.S. Attorney Rachel K. Jones.

Israel on Monday became a full member of the Financial Action Task Force, an international body set up to combat money laundering, terrorist financing and other threats to the international financial system.

The Jewish state has now taken its place alongside 37 other members — including most of the G20, the world’s 20 leading industrialized and emerging economies — just 16 years after being blacklisted by the organization.

According to the Justice Ministry, a FATF compliance report on Israel — also issued Monday and based on a detailed compliance audit carried out in Israel earlier this year — ranked the country as one of three leading states, alongside the US and the UK, for the effectiveness of its anti-money laundering apparatus, its battle against terror financing, the work of its Money Laundering and Terror Financing Prohibition Authority, and its policy of seizing the financial proceeds of crime.

“Joining the organization is a national achievement on a political level, contributing to Israel’s ability to fight terrorist financing internationally, and strengthening the Israeli economy,” Justice Minister Ayelet Shaked told a press conference.

Membership also tags Israel as an attractive country for international investment and improve the status of the Israeli financial sector and its ability to operate in the global economy, Shaked added.

Shlomit Wagman-Ratner, head of the Israel Money Laundering and Terror Financing Authority, said, “The report reflects the decisive leap that Israel has taken over the past two decades in its perception of the need to protect the integrity and security of Israel’s financial system.”

FATF President Marshall Billingslea said, “In a comprehensive review of its anti-money laundering and terror financing regime, Israel successfully achieved good results in identifying and addressing the risks facing it.

“The review process is not the end point, but is Israel’s starting point for further strengthening the regime, and we are confident that in light of Israel’s commitment to protecting the integrity of its financial system, the county will act quickly to implement the recommended actions in the audit report.

“Membership in FATF opens a new chapter for Israel and will enrich FATF as an organization.”

WICHITA FALLS, TX (RNN Texoma) – Wichita County Sheriff Deputies say they have arrested three men after a traffic stop unveiled more than $75,000 in cash and “hundreds of names, credit card numbers, pin numbers and zip codes.”

According to a press release, a Highway Interdiction Deputy made a traffic stop on U.S. 287 near Electra at around 1:45 Monday afternoon.

The occupants consented to a search of the car.

During the search, the deputy discovered $75,215 cash, gift cards not under the names of the driver or passengers, and two flash drives containing names, credit card numbers and more.

The driver, 34 year old Osniel Ramirez along with two passengers have been arrested.

The Passengers have been identified as 25 year old Disney Avila and 27 year old Miguel Aguiler.

All three man face charges of Fraudulent Use/Possession of Identifying Information and Money Laundering.

Each remains in the Wichita County Jail on separate $25,000 bonds. All three men also have federal holds placed meaning they are unlikely to be released. Avila also has an Immigration’s and Customs Enforcement detainer.

All three men were under investigation by the Amarillo Police Department regarding a large number of identity theft cases that occurred in that city.